Case

Problemdefinition

We are a global toothbrush producing company. Our portfolio consists of two kinds of toothbrushes - 'manual' that sells for $6 and an electric 'rechargeable' that sells for $60. Last year, a competitor introduced a battery-powered electric “spinbrush” that sells for $8.5 and now has 2% of the toothbrush market. We don't have a similar offering and would like you to tell us whether we should develop a similar product or not.


Kommentare

This is a candidate-led case; therefore the candidate should lead the case from start to finish.


Kurzlösung

Key Question: Should the client develop a product similar to the spinbrush?

Answer: Since the rechargeable segment is more profitable ($12.9 per customer per year) than manual and spinbrush ($7 per customer per year), the client should consider alternative means to respond to spinbrush because producing a similar product will further threaten its most profitable rechargeable segment.


Detaillierte Lösung

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.

I. Background

If the candidate is struggling with the initial structuring of the problem, ask him to use the metric “per customer per year” for comparison of the segments.

Provide the following information to the interviewee if requested:

Till last year, the toothbrush market was of 75% manual and 25% rechargeable toothbrushes. The 2% market share gain of battery spinbrush has come mostly at the expense of rechargeable toothbrush sales.

Manual toothbrush:

  • Net profit margin on sales of manual toothbrushes is 70%
  • On an average, a manual toothbrush consumer buys 2 toothbrushes per year

Rechargeable toothbrush:

  • Rechargeable toothbrushes are sold as two separate parts- 'base' that sells for $60 (with a 65% net profit margin) and 'head' that sells for $5 (with a 90% net profit margin) - Both are needed for the device to work
  • Life of an average base is 10 years
  • Life of an average head is 6 months

Spinbrush:

  • We believe that we can produce it at a cost of $5 per brush

II. Analysis

Key Question: Should the client develop a product similar to the spinbrush?

To answer this quesiton, we should calculate the profit per customer per year for all three segments.

Assumption - The life of a spinbrush is 6 months.

We can see that the manual and spinbrush are similar in terms of profitability. But the manual is unlikely to lose share to spinbrush as it is cheaper.

Rechargeable is the most profitable segment out of the three and is losing share to spinbrush. If the client starts producing a similar spinbrush it will further threaten the rechargeable segment.

Therefore, the client should consider alternative means (and not knockoff) to respond to the spinbrush product.

III. Conclusion

The client should consider alternative means to respond to spinbrush as producing a similar product will further threaten its most profitable rechargeable segment.

Schwierige Fragen

If the interviewee solves the case very quickly, you can come up with more challenging questions.

Verwandte Consulting-Fragen

Two frameworks here: 4 Ps (= price, place, product, promotion), or the Ansoff Matrix (grow with existing or new products in existing or new markets). Both are quite MECE. Word of caution however --... (mehr)

Hi there, I would start by asking some general questions to have a better feeling on the case: 1) Does our client provides this new service elsewhere? If not, does our client already has the cap... (mehr)

Beste Antwort bisher:
Hemant
Experte
Ex-Mckinsey, current strategy guy at Google.

It's a badly framed question but that is no reason you should have a badly thought-out response. Sometimes interviewers will ask these just to tell whether you jump into a "5%? 10%?" guess-work or use... (mehr)

Bisher beste Antwort von 2 Antworten:
BCG Consultant / Interviewed 80+ applicants at BCG / Received offers from McK (US) and BCG (DE)

Hi Marilena, good question. I would always structure such a case completely top down. E.g. in your case, start with the population, then % of people needing glasses, % of those in reach of your... (mehr)

There is a MECE answer provided to this by Nuno if market sizing is part of a market entry case. I believe this question is straight at market sizing, so i will provide my thoughts to this. I as... (mehr)

Verwandte BootCamp-Artikel

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

9 Kommentar(e)

Market Sizing

Market Sizing Cases are used to test your quantitative and reasoning skills. The interviewer evaluates your structure, numbers-handling and business sense.

11 Kommentar(e)

Competitive Response

In a competitive response case study, your job is either to analyze what your client should do in response to a move performed by a major competitor or to anticipate what competitors will do in response to a move performed by the client

0 Kommentar(e)

Income Statement

The income statement, also known as profit and loss statement, is a summary of the revenue and costs over the last year. Costs are subtracted from revenue and as a result, either positive or negative net income is generated. The income statement belongs to the three financial statements together with the balance sheet and cash flow statement.

2 Kommentar(e)

The Value Chain

The Value Chain - as e.g. by Porter - is a classic framework to structure the activities of a business and add value to products by transforming resources.

2 Kommentar(e)
4.7 (556 Bewertungen)
4.7 5 556
Case-Exhibits